Nate Weiner, developer of Pocket (formerly Read it Later) wrote a smart post today about why they went free:

By being a paid app, Read It Later was charging like the fast food case, even though the value of our product maps much closer to the second and third graphs. Put simply: From a business perspective, having a user pay $2.99 up-front once and then use the app for 4 years just doesn’t make a lot of sense.

These days I’m pretty squarely in the camp of “I want to pay for a service to ensure it’ll stick around.” Nate however, makes a compelling case about the why the upfront pay model doesn’t work for their target market.

Pocket has made it very clear from their new site that they are shooting to be the “anything bucket for the rest of us.” As Pat Hines pointed out today: Their video is nearly all women, non-geeks, and non hipsters.

It’s a smart move, especially given that Instapaper (and now Readability) are dominating the read later market. The geek market is clearly saturated with anything buckets, between Instapaper, Readability, Pinboard, Yojimbo, Evernote, and others, we’ve all got our systems, and when you buy into one, it’s bought to switch away.

Pocket made the right move to appeal to a new demographic, much like Pinterest did. It’s risky to be free, but they have a service that takes some time to buy in to and see the value, especially with non-geeks who generally aren’t digital collectors naturally.

However, Pocket fails because from day one they don’t have the option of paying them for something. They hint that there are greater monetization options coming in the future, but users will kick and scream if their storage gets limited in the future, which is the natural business model that’s coming. It’s Dropbox and Evernote’s business model.

FiftyThree’s Paper is the gold standard for Freemium these days. Try out the app, see how awesome it is, but then pay $1.99-$7.99 to get all the tools. It works. They’ve stayed in the top 30 grossing apps since they launched.

Can Pocket pull it off? The space of anything buckets for the rest of us is definitely ripe for growth, and Read It Later should be given credit as they pivoted quickly in response to Readability taking the position of second fiddle to Instapaper. They have an opportunity to build a great service, and not just copy what Marco was already doing.